P Chidambaram, a senior Congressman, today questioned if states can afford to forego money from VAT on petrol and diesel unless the federal government devolves more funds or provides more grants, comparing their situation to “the devil and the deep sea.”
The former finance minister’s comments came a day after the government announced an excise duty drop of Rs 8 per litre on petrol and Rs 6 on diesel.
“The notification for the duty reduction on petrol and diesel is now accessible. Although FM used the term “excise duty,” the reduction is in Additional Excise Duty, which is not shared with states. As a result, contrary to what I mentioned yesterday, the Centre bears the whole responsibility of the cut. To that extent, I accept my apologies “According to Mr. Chidambaram.
The states receive very little in terms of share of duties on and diesel, he added, stressing that their primary source of revenue is VAT on gasoline and fuel.
Mr Chidambaram remarked, “I question if they can afford to give up that money unless the Centre devolved more cash or provided them more assistance.”
In a series of tweets, he compared the situation to being between “the devil and the deep sea.”
Following the government’s decision to decrease excise duty on vehicle fuels, petrol prices were slashed by Rs 8.69 per litre yesterday and diesel prices by Rs 7.05 per litre, providing respite to consumers who had been hit by high fuel prices that had pushed inflation to a record high.